An exemption from Capital Acquisitions Tax (CAT) is available for gifts or inheritances taken exclusively for the purposes of discharging certain medical and related expenses of an individual who is permanently incapacitated by reason of physical or mental infirmity.

Such a gift or inheritance is not taken into account in computing a CAT liability.

In order to qualify for the exemption the following criteria must be satisfied:
– The gift or inheritance must be taken by a person who is permanently incapacitated by reason of physical or mental infirmity.
– The gift or inheritance must be taken exclusively for the purpose of discharging qualifying expenses of the incapacitated person. In this regard it is the intention of the disponer providing the gift or inheritance that determines the availability of the exemption. In the
absence of such an intention, it is not relevant that a beneficiary might decide, after receiving an inheritance, to use it to discharge medical expenses.
– The use of the gift or inheritance for any purpose other than the discharge of qualifying medical expenses does not qualify. The exemption may be withdrawn where Revenue is not satisfied that the gift or inheritance was applied or will be applied in discharging qualifying expenses. It is not necessary that the entire gift or inheritance be used for this purpose but any part used for any other purpose does not qualify.
– Qualifying expenses are those that relate to medical care including the cost of maintenance in connection with such medical care.

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